G7 gives China nod on yuan as Europe keeps up pressure
Sat Feb 9, 2008 3:01pm GMT
TOKYO (Reuters) - Group of Seven finance ministers and central bankers gave China a slight nod on its efforts to unshackle the yuan and allow more appreciation, even as European officials kept up their pressure on Beijing for more action.
The final communique from the G7's Tokyo meeting on Saturday said "we encourage" the need for greater appreciation of the yuan, a slight softening from "we stress" in the communique from the last gathering in October.
The tweak in language comes as China has the let the yuan rise at a quicker pace against the dollar and the euro, especially after European officials made a visit to Beijing late last year and pressed the case for a broader rise in the Chinese currency.
But Europe also remained steadfast in its calls for China to keep allowing the yuan to strengthen while expressing worries about the single currency's elevated level against the dollar and other major currencies.
European Central Bank President Jean-Claude Trichet said after the meeting that the message on the yuan is very clear: "We welcome and we encourage it to accelerate."
ECB Governing Council member Axel Weber said China should allow currency flexibility not just against the dollar but also against other major currencies.
European Union Monetary Affairs Commissioner Joaquin Almunia said the euro's broad trade-weighted value "has reached a level we can consider is above equilibrium level."
The yuan has been a hot-button issue for G7 powers over the past years who believe Beijing's tight management of the currency keeps it unfairly weak, giving China a trade advantage while contributing to global economic imbalances.
Those imbalances in China have been highlighted by its burgeoning trade surplus with the United States and Europe, as well as its swelling foreign reserves that at more than $1.5 trillion (770 billion pounds) are by far the biggest in the world.
But the yuan faded from the focus of this meeting as a response to the financial market turmoil and potential for a broadening global economic slowdown from the U.S. housing market's collapse took centre stage.
In his post-meeting press conference, U.S. Treasury Secretary Henry Paulson didn't field a single question on currencies.
The G7's stance on China and exchange rates has been an evolving one. Initially, the G7 statement referred to countries with large trade surpluses, such as those in Asia, allowing greater exchange rate flexibility.
In July 2005, China finally dropped the yuan's peg to the dollar and allowed it to move in a tight band against a basket of currencies.
The yuan's glacial rise against the dollar at the beginning gradually accelerated, and the currency climbed 3.4 percent in 2006 and then nearly 7 percent last year.
The G7 acknowledged these steps, but in 2006 the G7 took investors and analysts by surprise by attaching an annex to its communique on global imbalances.
Read More Here
Saturday, February 9, 2008
Trade #037
Trade #037
Buy - EUR/JPY (H1)
Entry = 158.22
Exit = 158.35
Total = + 2041 pips (37 trades)
See my live journal : here
Buy - EUR/JPY (H1)
Entry = 158.22
Exit = 158.35
Total = + 2041 pips (37 trades)
See my live journal : here
Thursday, February 7, 2008
Wednesday, February 6, 2008
Northern Rock-style crisis 'would cause chaos in Eurozone'
Northern Rock-style crisis 'would cause chaos in Eurozone'
By Edmund Conway and Katherine Griffiths
Last Updated: 1:22am GMT 07/02/2008
A Northern Rock-style disaster would cause "chaos" if it happened in the Eurozone, the European Commissioner for Internal Markets admitted last night.
In a speech to the Society of Business Economists, Charlie McCreevy warned that with 44 financial regulatory institutions on the Continent it was almost impossible to conceive of how they would unite to combat a potential Europe-wide bank run.
Responding to a question from economist Tim Congdon about what would have happened had Northern Rock been based in the Eurozone, he said: "The reality is we would be in a mess. There would be chaos. There are 44 regulatory institutions and we have to find some modus operandi to get them together, because as sure as night follows day there will soon be a crisis we all have to deal with."
While not in favour of a single regulator, Mr McCreevy said the Eurozone needed a lead institution.
The admission came as the UK regulator said it was reviewing its practices in light of the Northern Rock crisis.
The Financial Services Authority (FSA) said it was considering whether it can improve its supervision of companies and reviewing the way it analyses a company's liquidity.
The FSA unveiled the exercise as it published its business plan for 2008. It said spending would increase by 7pc to £323m this year, as it faces increased uncertainty about the economic outlook and a need to beef up supervision in certain areas.
Almost all of the budget increase will be met by bigger contributions to the regulator from individual companies.
Politicians attacked the FSA in the wake of the Northern Rock crisis for its failure to put the brakes on the bank, which relied on wholesale debt markets for 75pc its funding.
Yesterday, Hector Sants, the FSA's chief executive, said: "The outcome of the follow-up initiatives arising from the various reviews of Northern Rock is likely to cause us to reassess our priorities."
Mr Sants said he had commissioned a "lessons learned" review of the FSA's approach to supervision. The results will be published in March. The FSA is also co-operating with the Bank of England to consider the UK's approach to assessing liquidity, Mr Sants added.
"We are conscious that the coming year presents more difficulties and uncertainties than we have faced in recent times," he said.
The regulator said it is also working with the other members of the Tripartite Authorities - the Treasury and the Bank - to review the way they respond to an emergency situation such as the Northern Rock debacle.
The FSA said firms needed to have a comprehensive view of all the possible demands on liquidity that could arise from various sources and develop plans to meet those demands. They should also maintain an emergency supply of cash.
Source:Telegraph.co.uk
By Edmund Conway and Katherine Griffiths
Last Updated: 1:22am GMT 07/02/2008
A Northern Rock-style disaster would cause "chaos" if it happened in the Eurozone, the European Commissioner for Internal Markets admitted last night.
In a speech to the Society of Business Economists, Charlie McCreevy warned that with 44 financial regulatory institutions on the Continent it was almost impossible to conceive of how they would unite to combat a potential Europe-wide bank run.
Responding to a question from economist Tim Congdon about what would have happened had Northern Rock been based in the Eurozone, he said: "The reality is we would be in a mess. There would be chaos. There are 44 regulatory institutions and we have to find some modus operandi to get them together, because as sure as night follows day there will soon be a crisis we all have to deal with."
While not in favour of a single regulator, Mr McCreevy said the Eurozone needed a lead institution.
The admission came as the UK regulator said it was reviewing its practices in light of the Northern Rock crisis.
The Financial Services Authority (FSA) said it was considering whether it can improve its supervision of companies and reviewing the way it analyses a company's liquidity.
The FSA unveiled the exercise as it published its business plan for 2008. It said spending would increase by 7pc to £323m this year, as it faces increased uncertainty about the economic outlook and a need to beef up supervision in certain areas.
Almost all of the budget increase will be met by bigger contributions to the regulator from individual companies.
Politicians attacked the FSA in the wake of the Northern Rock crisis for its failure to put the brakes on the bank, which relied on wholesale debt markets for 75pc its funding.
Yesterday, Hector Sants, the FSA's chief executive, said: "The outcome of the follow-up initiatives arising from the various reviews of Northern Rock is likely to cause us to reassess our priorities."
Mr Sants said he had commissioned a "lessons learned" review of the FSA's approach to supervision. The results will be published in March. The FSA is also co-operating with the Bank of England to consider the UK's approach to assessing liquidity, Mr Sants added.
"We are conscious that the coming year presents more difficulties and uncertainties than we have faced in recent times," he said.
The regulator said it is also working with the other members of the Tripartite Authorities - the Treasury and the Bank - to review the way they respond to an emergency situation such as the Northern Rock debacle.
The FSA said firms needed to have a comprehensive view of all the possible demands on liquidity that could arise from various sources and develop plans to meet those demands. They should also maintain an emergency supply of cash.
Source:Telegraph.co.uk
Tuesday, February 5, 2008
Trade #035
BUY - EUR/JPY (H1)
Entry = 157.76
Exit = 158.13
Profit = 37 pips
Total = + 2003 pips (35 trades)
Live Trade Journal: journal Here
Dollar Charges Ahead Versus Euro And Sterling Despite Grim Outlook For US Economy
(RTTNews) - The dollar gained on the euro and sterling but gave back its early gains versus the yen on Tuesday in New York. Markets worldwide were roiled when US data from the Institute of Supply Management revealed that activity in the service sector unexpectedly contracted for the first time since March of 2003.
The ISM said that its index of activity in service sector fell to 41.9 in January from a revised 54.4 in December, with a reading below 50 indicating contraction in the sector. Economists had expected the index to edge down to 53.9. The data prompted many analysts to predict that the US economy was entering a prolonged period of recession.
The dollar raced higher versus the euro on Tuesday, jumping almost 2 cents to 1.4622. Euro-zone retail sales edged down 0.1% in December compared to a 0.5% fall in November. Economists were looking for an increase of 0.2%.
The dollar hit a 2-week high versus the sterling on Tuesday, extending Friday's significant gains. The greenback rose to 1.9603, up more than a cent from its overnight levels.
Versus the yen, the dollar advanced to a 10-day high of 107.73 before racing lower on risk aversion after the ISM data. The dollar fetched 107 at 3 pm ET, having come off its mid-day low near 106.70.
Source: Nasdaq.com
The ISM said that its index of activity in service sector fell to 41.9 in January from a revised 54.4 in December, with a reading below 50 indicating contraction in the sector. Economists had expected the index to edge down to 53.9. The data prompted many analysts to predict that the US economy was entering a prolonged period of recession.
The dollar raced higher versus the euro on Tuesday, jumping almost 2 cents to 1.4622. Euro-zone retail sales edged down 0.1% in December compared to a 0.5% fall in November. Economists were looking for an increase of 0.2%.
The dollar hit a 2-week high versus the sterling on Tuesday, extending Friday's significant gains. The greenback rose to 1.9603, up more than a cent from its overnight levels.
Versus the yen, the dollar advanced to a 10-day high of 107.73 before racing lower on risk aversion after the ISM data. The dollar fetched 107 at 3 pm ET, having come off its mid-day low near 106.70.
Source: Nasdaq.com
Dollar Adds To Early Gains Versus Sterling
Dollar Adds To Early Gains Versus Sterling
(RTTNews) - The dollar extended its early gains against the sterling Tuesday afternoon in New York, rising to 1.9609 from an overnight level near 1.97. With the advance, the dollar moved further away from last week's monthly low of 1.9957.
Source: Nasdaq.com
(RTTNews) - The dollar extended its early gains against the sterling Tuesday afternoon in New York, rising to 1.9609 from an overnight level near 1.97. With the advance, the dollar moved further away from last week's monthly low of 1.9957.
Source: Nasdaq.com
Trade #034
Trade #034
BUY - EUR/USD (H1)
Entry = 1.4727
Exit = 1.4770
Profit = 43 pips
Total = + 1966 pips
Great Day !!!!!!!!!
Lests go Skyson !!!!!!!!!!
Live Journal Here
Monday, February 4, 2008
UK Darling: Must Resist Heavy-Handed Financial Regulation
Mon, Feb 4 2008, 19:31 GMT
http://www.djnewswires.com/eu
UK Darling: Must Resist Heavy-Handed Financial Regulation
LONDON -(Dow Jones)- The U.K. will resist any disproportionate reaction to the recent troubles in financial markets, Chancellor of the Exchequer Alistair Darling said Monday.
The troubles at U.K. mortgage lender Northern Rock (NRK.LN) and elsewhere have "meant that the regulatory system has been under intense scrutiny over recent months here and throughout the world," Darling said in a speech to a banking group.
"To revert to more heavy-handed or mechanistic regulation, to put process before substance would not fulfill our objectives and would stifle innovation. So we will not let that happen," he added.
Darling said that despite the recent financial market turmoil, the U.K. economy remains "strong and stable."
He also said that the government's policies mean the U.K. has low debt and historically low interest rates.
"We are able to do what is right to support growth in these uncertain times," he said.
Source: Fxstreet.com
http://www.djnewswires.com/eu
UK Darling: Must Resist Heavy-Handed Financial Regulation
LONDON -(Dow Jones)- The U.K. will resist any disproportionate reaction to the recent troubles in financial markets, Chancellor of the Exchequer Alistair Darling said Monday.
The troubles at U.K. mortgage lender Northern Rock (NRK.LN) and elsewhere have "meant that the regulatory system has been under intense scrutiny over recent months here and throughout the world," Darling said in a speech to a banking group.
"To revert to more heavy-handed or mechanistic regulation, to put process before substance would not fulfill our objectives and would stifle innovation. So we will not let that happen," he added.
Darling said that despite the recent financial market turmoil, the U.K. economy remains "strong and stable."
He also said that the government's policies mean the U.K. has low debt and historically low interest rates.
"We are able to do what is right to support growth in these uncertain times," he said.
Source: Fxstreet.com
World Bank cuts China growth forecast
World Bank cuts China growth forecast
By JOE McDONALD -- AP Business Writer
Published: Monday, February 4, 2008
BEIJING (AP) The World Bank cut its 2008 economic growth forecast for China to 9.6 percent from 10.8 percent on Monday due to cooling global export demand and said storms battering southern China should have little long-term impact.
Growth should be buoyed by expected strong demand from China's own consumers, though a possible U.S. slowdown might hurt the country's large export sector, the bank said in a quarterly report.
Economists have slashed forecasts for China's fast-growing economy amid worries that a U.S. recession could cut American imports and hurt other Chinese markets such as Europe and Japan.
"The world economy is going to be weaker, and this will have an impact on China," said Louis Kuijs, a bank economist who was the report's chief author. Still, he said, "China is in a relatively strong position."
Growth of 9.6 percent was "still robust," Kuijs said.
Snowstorms that have wrecked crops and disrupted trains and trucking in southern China will hurt industrial output and push up prices of vegetables and other perishable goods, but there should be little long-term effect, the bank said. The government has reported storm damage so far at 53.8 billion yuan ($7.5 billion).
"There is no doubt it is going to affect industrial production and economic activity in the short term," Kuijs said. "We do think, though, that most of this impact is going to be temporary."
The slowdown in global demand will hurt China's manufacturers and exporters, Kuijs said. The government says exports rose 25.7 percent in 2007 to $1.2 trillion.
But Chinese consumer spending and corporate profits are "still strong" and Beijing is moving ahead with investment plans that should help to shore up growth, Kuijs said.
The bank warned that China still faces potential problems as it tries to manage rapid growth, control a surge in inflation and cope with a flood of export revenues that are straining the central bank's ability to contain pressure for prices to rise.
Inflation so far is limited to food, but if it continues, "the risk remains that it will be fed through into general inflation," Kuijs said.
The central bank has raised interest rates repeatedly over the past year, and Kuijs said regulators were right to focus on such a "relatively tight" monetary stance.
Beijing has responded to the surge in food costs by imposing price controls and trying to increase supplies by boosting subsidies to pig farmers and curbing grain exports.
David Dollar, director of the World Bank's Beijing office, said such controls could help in the short run. But he echoed warnings by other economists who say they could hurt the economy by eliminating incentives to expand output.
If pork or grain prices are set below what it costs farmers to produce them, "then you are discouraging production of exactly what is in short supply," he said.
Dollar said that over time, Beijing might consider easing controls and instead paying food subsidies to poor families.
Chinese regulators also could face challenges if the United States responds to an economic slowdown by cutting interest rates further, Kuijs said. That could make China, with higher rates, more attractive to foreign investors, attracting more money at a time when Beijing is trying to curb the export-driven flood of cash pouring through the economy.
Links by inform.com
From : Pressofatlanticcity.cim
By JOE McDONALD -- AP Business Writer
Published: Monday, February 4, 2008
BEIJING (AP) The World Bank cut its 2008 economic growth forecast for China to 9.6 percent from 10.8 percent on Monday due to cooling global export demand and said storms battering southern China should have little long-term impact.
Growth should be buoyed by expected strong demand from China's own consumers, though a possible U.S. slowdown might hurt the country's large export sector, the bank said in a quarterly report.
Economists have slashed forecasts for China's fast-growing economy amid worries that a U.S. recession could cut American imports and hurt other Chinese markets such as Europe and Japan.
"The world economy is going to be weaker, and this will have an impact on China," said Louis Kuijs, a bank economist who was the report's chief author. Still, he said, "China is in a relatively strong position."
Growth of 9.6 percent was "still robust," Kuijs said.
Snowstorms that have wrecked crops and disrupted trains and trucking in southern China will hurt industrial output and push up prices of vegetables and other perishable goods, but there should be little long-term effect, the bank said. The government has reported storm damage so far at 53.8 billion yuan ($7.5 billion).
"There is no doubt it is going to affect industrial production and economic activity in the short term," Kuijs said. "We do think, though, that most of this impact is going to be temporary."
The slowdown in global demand will hurt China's manufacturers and exporters, Kuijs said. The government says exports rose 25.7 percent in 2007 to $1.2 trillion.
But Chinese consumer spending and corporate profits are "still strong" and Beijing is moving ahead with investment plans that should help to shore up growth, Kuijs said.
The bank warned that China still faces potential problems as it tries to manage rapid growth, control a surge in inflation and cope with a flood of export revenues that are straining the central bank's ability to contain pressure for prices to rise.
Inflation so far is limited to food, but if it continues, "the risk remains that it will be fed through into general inflation," Kuijs said.
The central bank has raised interest rates repeatedly over the past year, and Kuijs said regulators were right to focus on such a "relatively tight" monetary stance.
Beijing has responded to the surge in food costs by imposing price controls and trying to increase supplies by boosting subsidies to pig farmers and curbing grain exports.
David Dollar, director of the World Bank's Beijing office, said such controls could help in the short run. But he echoed warnings by other economists who say they could hurt the economy by eliminating incentives to expand output.
If pork or grain prices are set below what it costs farmers to produce them, "then you are discouraging production of exactly what is in short supply," he said.
Dollar said that over time, Beijing might consider easing controls and instead paying food subsidies to poor families.
Chinese regulators also could face challenges if the United States responds to an economic slowdown by cutting interest rates further, Kuijs said. That could make China, with higher rates, more attractive to foreign investors, attracting more money at a time when Beijing is trying to curb the export-driven flood of cash pouring through the economy.
Links by inform.com
From : Pressofatlanticcity.cim
Dollar Will Likely Fall Further Before Rising in 2008
Dollar Will Likely Fall Further Before Rising in 2008
We remain comfortable with the view that EUR/USD will end the year significantly lower than it is now, though in the near term the dollar may not rally. We have centred our call on a bounce in the dollar against the EUR and the GBP this year on the thesis that risk-aversion would spike so high as the US falls into a recession that fear-motivated bond flows would perversely support the dollar, just as they did in 2000-01. This thesis has partly worked so far this year, as the sharp erosion in the USD’s yield premium should have been extremely damaging for the dollar but the dollar has not collapsed with the FFR. We still feel comfortable with the ‘Dollar Smile’ framework.
Written by Stephen Roach, Head Economist, Morgan Stanley
Source: http://www.dailyfx.com/story/other/free_third_party_research/Dollar_Will_Likely_Fall_Further_1202143349612.html?engine=rss&keyword=article
We remain comfortable with the view that EUR/USD will end the year significantly lower than it is now, though in the near term the dollar may not rally. We have centred our call on a bounce in the dollar against the EUR and the GBP this year on the thesis that risk-aversion would spike so high as the US falls into a recession that fear-motivated bond flows would perversely support the dollar, just as they did in 2000-01. This thesis has partly worked so far this year, as the sharp erosion in the USD’s yield premium should have been extremely damaging for the dollar but the dollar has not collapsed with the FFR. We still feel comfortable with the ‘Dollar Smile’ framework.
Written by Stephen Roach, Head Economist, Morgan Stanley
Source: http://www.dailyfx.com/story/other/free_third_party_research/Dollar_Will_Likely_Fall_Further_1202143349612.html?engine=rss&keyword=article
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